More HMOs to require licences

More than 170,000 Houses in Multiple Occupation (HMOs) are to be drawn into the licensing regime operated by local authority housing departments, the Residential Landlords’ Association has estimated.

Until now, only HMOs larger than three storeys tall have been subject to compulsory licensing, but new regulations that came into effect on the 1st of October 2018, extends the requirement to any HMO (a property accommodating at least five tenants who are living as more than one independent household and sharing essential facilities such as kitchens, bathrooms and toilets with other tenants).

Local authorities are free to exercise their own judgment as to how licensing regimes might best be used to improve the general quality of affordable rented accommodation, but one of the universal conditions incorporated into the new rules means that bedrooms must measure at least 6.5 square metres in floor area.

Costs

HMO landlords already face the expense of operating expenses – such as mortgage repayments, letting agent fees etc. – in a financial environment recently made tougher by the removal of tax relief on mortgage interest repayments and a 3% surcharge in Stamp Duty on the purchase of a second home used as buy to let accommodation.

Landlords could get hit by the legislation if they need costly refits to make room sizes larger – even in the most luxurious of rentals.

It remains to be seen just how much it might cost the average landlord of an HMO to bring the property up to the required new standards, although they may be given an 18-month period of grace to bring it up to scratch. Thereafter, breaches of the licensing requirements may attract fines of up to £30,000 for every offence.

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